87.8% of properties sold nationwide fetched prices higher than what the sellers had originally paid, Cotality’s latest Pain and Gain report has revealed.
This is a decrease from 89.4% in the previous quarter and represents the highest proportion of sellers making a loss since 2013.
In Auckland, 18.2% of owner-occupier sellers are experiencing a loss, while 22.8% of investors are also making a loss. This represents the highest loss percentage among the main centres.
In Wellington, 13.4% of owner-occupiers and 20.9% of investors made a loss on their property sales.
Cotality chief property economist Kelvin Davidson said the data aligns with prices still being below their peaks in many regions, leaving buyers with most of the pricing power in the current market.
“Both Auckland and Wellington went through very strong growth during the boom period, so more recent buyers paid top prices and are now more vulnerable. Auckland’s larger pool of apartments also contributes to its higher loss rate, although that reflects long-run performance rather than short-term weakness,” he said.
The national median resale gain in the third quarter was $270,000, which is lower than the late-2021 peak of $440,000 but still higher than any gains recorded before late 2020.
The median loss during this period was $50,000, slightly less than the median loss reported in the second quarter.
Davidson explained that the key difference was the length of time people had owned a property before selling it. The median ownership period for sellers who made a gain was 9.5 years, while those who sold at a loss had typically owned their properties for just under four years.
“The resale performance of property is not weak in an absolute sense, but the figures highlight the role of time in the market. Longer ownership provides a much greater likelihood of securing a capital gain.
“Three-and-a-bit years ago places you [were] at a point in the cycle when prices were extremely high and mortgage rates were already rising. Anyone who bought then and has since faced a change in circumstances is more exposed to selling at a lower price than expected.”
Davidson said standalone houses have a lower likelihood of selling at a loss compared to apartments, with only 11.4% of standalone houses sold at a loss, whereas 36.2% of apartments sold for less than their purchase price.
In Queenstown Lakes, only 2.4% of sellers made a loss, with the median gain reaching $486,000.
“If you look at the median gain of $270,000, most people would say that’s still pretty substantial. It is weaker than it’s been for quite some time, but it’s not a complete blowout either. If you go back to the GFC around 2007 and 2008, the share of resales made for a profit fell from pretty much 100% to close to 80% in about two years. This time it’s fallen from about 100% to about 90% in about four years. It’s been more of a slow burn,” Davidson said.
“It’s always going to be a bit lagged because if you think things have turned around …the hold period is a big factor. Even if values have turned around in the past couple of months, they are still 17% below where they were at the peak. Anybody who bought four years ago even if they have seen their property value tick up in the last few months, there is still a likelihood of making a loss because they purchased at the peak of the market.”